Sufficiently regular voluntary overtime should be included when calculating holiday pay

In the case of Brettle v Dudley Metropolitan Borough Council, the Employment Tribunal held that regular voluntary overtime payments fall within the definition of “normal pay” for the purposes of calculating holiday pay, together with out of hours standby payments, call out allowances and taxable elements of travel allowances.

FactsThe Claimants were representing a group of 56 individuals, all of whom worked for the Council repairing and improving housing stock. The Claimants argued that their holiday pay was not inclusive of all hours they would usually work in any given working week and that they had therefore suffered numerous deductions from wages. This is because they were all involved in voluntary overtime arrangements whereby they had the option of working Saturdays and/or being a part of the on-call rota.

DecisionThe Employment Tribunal (Tribunal) found that regular and additional voluntary hours worked as overtime could be included when calculating holiday pay where the employee viewed the hours as an extension of his working week. In this case, the hours contributed to the employees’ normal pay as the voluntary overtime was a regular occurrence and therefore to exclude such payments from holiday pay could deter an employee from taking holiday.

Further, the Tribunal held that signing up to the call out rota was initially voluntary but once on the rota employees had to attend any call outs during their allotted time and thus the payments were normal pay. Conversely, once an employee had voluntarily opted to be on the out of hours standby rota they were entirely at liberty to refuse to do their allotted periods. Notwithstanding that, the Tribunal were of the view that standby payments were such a frequent occurrence that they should also be included in the calculation of holiday pay.

CommentThis decision is not binding as it is a first instance decision but indicates that there is a real risk that employees regularly working voluntary overtime and receiving overtime pay are likely to be entitled to have overtime pay included when calculating holiday pay.

However, the Tribunal emphasised that whether the voluntary overtime pay amounts to normal pay for the purposes of holiday pay calculations is a question of fact. In this case, the voluntary overtime was, in the case of most of the employees, sufficiently regular so as to warrant being normal pay. It is far less likely that one-off or infrequent overtime will be included in a holiday pay calculation. Indeed, in this case, the Tribunal found against one employee on the basis that he only rarely undertook voluntary overtime and, as such, it could not be considered part of his normal pay.